Coronavirus Food Assistance Program Provides Relief to Ag Producers

June 10, 2020 | Article

By Mike Schaefer

As part of the CARES Act, the U.S. secretary of agriculture has established the Coronavirus Food Assistance Program (CFAP) to provide financial assistance to eligible agricultural producers impacted by the effects of the COVID-19 outbreak.

The impacts of COVID-19 and the various relief provisions are far reaching. We’ve developed resources to help.

What is the Coronavirus Food Assistance Program?
CFAP is a new U.S. Department of Agriculture (USDA) program in direct response to the COVID-19 pandemic. The $19 billion relief program provides support to farmers and ranchers with the aim to maintain the integrity of the food supply chain and ensure continual access to food for Americans.

The CFAP is not a loan program so it does not need to be repaid. There is a maximum payment limitation of $250,000 per person or entity if all commodities are combined. If approved, ag producers will receive 80% of the initial eligible payment or $200,000 maximum up front. The final 20% will be paid at a later date up to a maximum of $250,000 as long as funds remain available.

What Commodities Qualify for the Program?
Non-specialty crops that are eligible for CFAP payments include malting barley, canola, corn, upland cotton, millet, oats, sorghum, soybeans, sunflowers, durum wheat, and hard red spring wheat. Specialty crops eligible include almonds, beans, broccoli, sweet corn, lemons, iceberg lettuce, spinach, squash, strawberries, and tomatoes. Payments will also be eligible for ag producers with dairy, cattle, lambs and yearlings, wool, and hogs and pigs. Also, CFAP eligibility for certain other ag commodities, including commodities for which sufficient information is not currently available to USDA, may be announced through a notice of funding availability (NOFA). Approximately 4% of the CFAP budget—$637 million—is available to provide assistance to producers of other commodities that are identified through the NOFA process. Contact your local FSA office for more information.

Who Qualifies for the Coronavirus Food Assistance Program?
To be eligible for CFAP payments, agricultural entities who have one of the commodities listed above must have experienced one of the following:

  • Suffered a 5% or greater price loss over a specified time resulting from COVID-19
  • Face additional significant marketing costs for inventories:
    • Price losses due to declines in certain types of demand
    • Surplus production or to disruptions to shipping patterns
    • Orderly marketing of commodities

The individual or legal entity must have an adjusted average gross of income of under $900,000 for tax years 2016, 2017 and 2018. If at least 75% of the adjusted gross income comes from farming, ranching or forestry, the $900,000 limit no longer applies.

Understanding your financial situation as an ag producer is more important than ever.

How Do You Apply for the CFAP?
Beginning May 26, the USDA, through the Farm Service Agency, will be accepting applications from agricultural producers who have suffered losses. Producers apply directly through their local FSA Service Center. The program will run through August 28, 2020.

If you are new to the USDA, you will be asked the following type of information to help you apply:

  • Name and address
  • Personal information, including Tax Identification Number
  • Farm operating structure
  • Adjusted gross income compliance certification. This will ensure eligibility.
  • Direct deposit information to enable payment

In addition, producers will need sales, inventory and other records in order to complete the application. However, CFAP is a self-certification program, so this documentation will not actually need to be submitted with the application.

A CFAP payment calculator has also been made available to assist with the applications.

Frequently Asked Questions on the CFAP
What is the definition of an unpriced commodity?
According to the recently released FAQ put out by the USDA, unpriced is defined as “not subject to an agreed-upon price in the future through a forward contract, agreement or similar binding document as of January 15, 2020.”

Are there entity limits?
It appears that GPs will be allowed up to $250,000 per partner not subject to the $750,000 entity cap, while LLCs/corps will be allowed up to $250K,000 per active owner up to a cap of $750,000. However, attribution limits still apply that tie back to a Social Security number for a maximum payment of $250,000 for those that own multiple entities.

If I don’t participate in other USDA programs, can I still take part in CFAP?
Any ag producer that meets the eligibility guidelines for CFAP can participate. Participation with USDA is not a prerequisite for the program.

Get Help Understanding the Impact of the CFAP
The CFAP is designed to help ag producers during a critical time. It also comes with specific criteria for eligibility. Knowing if you qualify and how to correctly fill out your application will be critical as ag producers take advantage of this new program.

Want to know if you qualify for the CFAP?

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